Tax Rules for Expats Buying Property in Portugal

Thinking of buying property in Portugal? Understand the taxes, costs, and legal requirements before making your investment.

Foreign Property Ownership Rules in Portugal

Portugal remains an attractive destination for foreign investment, and despite the end of the golden visa scheme for property investment, the demand for real estate continues to be high. There are no specific restrictions for non-EU citizens wishing to purchase property in Portugal.

However, buyers need to obtain a Portuguese tax number (Número de Contribuinte) from the local tax office, which is essential for formal transactions like opening a bank account.

For those planning to live in Portugal long-term, it may be necessary to apply for a visa or residency permit before purchasing property. UK citizens, for example, can stay in Portugal for up to 90 days within a 180-day period, and will need to apply for the appropriate visa or residency permit for longer stays.

Portuguese Property Taxes

When purchasing property in Portugal, it’s crucial to factor in the associated taxes. These taxes are typically divided into property transfer taxes, municipal property taxes, and other ongoing liabilities.

Property Purchase Tax (IMT)

The Imposto Municipal sobre as Transmissões Onerosas de Imóveis (IMT) is a tax levied on property transfers. The rate is based on the property's value and whether it is a primary residence or second home. Below are the standard IMT rates:

Property Type	Tax Rate
Rural Properties	5%
Residential Properties in Cities	Up to 7.5%

If financing the purchase with a mortgage, the Imposto de Selo (stamp tax) applies, generally between 0.5% and 0.6% of the loan value.

Municipal Property Tax (IMI)

The Imposto Municipal Sobre Imóveis (IMI) is an annual property tax, similar to council tax in the UK. The rate ranges from 0.3% to 0.45% of the property’s value, with rural properties typically taxed at a higher rate of 0.8%.

Property Type	Tax Rate
Urban Properties	0.3% to 0.45%
Rural Properties	0.8%

Annual Tax on High-Value Properties (AIMI)

The Adicional Imposto Municipal Sobre Imóveis (AIMI) applies to properties valued over €600,000. The tax rate for individual owners is typically 0.7%. Rates for properties owned by companies, particularly those in tax haven jurisdictions, may vary.

The Process of Buying Property in Portugal

The process of purchasing property in Portugal involves several key steps, including appointing a notary, signing contracts, and handling taxes. Here’s an overview of the steps involved:

Step	Description
Obtain a Tax Number (NIF)	Non-residents need a Portuguese tax number (NIF).
Choose a Notary	A notary ensures legal compliance and registers the property.
Sign the Sales Agreement	The Contrato de Promessa de Compra e Venda is signed.
Pay IMT and Stamp Tax	Pay applicable taxes on the purchase.
Completion of Purchase	The Escritura Publica de Compra e Venda finalizes the purchase.

Once the purchase contract is signed and taxes are paid, the property is officially transferred into the buyer's name.

Tax Obligations for Property Owners in Portugal

When owning property in Portugal, foreign property owners should be aware of the taxes that apply both at the time of purchase and annually thereafter.

If you are a tax resident in Portugal, you are generally taxed on worldwide income and assets. Non-residents, however, are only taxed on Portuguese-sourced income and assets. Property taxes are applicable regardless of tax residency status, so it’s vital to budget for these taxes when considering your property purchase.

Consulting with a financial advisor or tax specialist is highly recommended to ensure that all tax liabilities are met, and that you understand how taxes apply to both your property in Portugal and your broader financial situation.

Need Assistance with Property in Portugal?

At INLIS Consulting, we provide expert advice and services to help you navigate the complexities of buying and owning property in Portugal. Whether you need help with taxes, legal requirements, or residency issues, our team is here to support you every step of the way. Contact us today to ensure your property investment is seamless and compliant with all Portuguese regulations.

Book a consultation now:

Email: geral@inlis.pt

Phone: +351 968 464 942